Mentoring

Once each quarter, I have lunch with students that took my VC Law class last summer. Today was the day for that lunch for this summer. It is an opportunity for my former students to get together with one another and with me, and an opportunity for me to answer questions and provide some advice to them; in essence, to do some mentoring.

I have been fortunate enough to have had wonderful mentors in my career. Just in the time that I have been in Silicon Valley, Hank Massey mentored me as a lawyer. Aryeh Finegold helped me make the transition from lawyer to businessman. Jacques Vallee taught me the business of venture capital investing.

Fortune magazine published an article last week about John Arrillaga, and I feel very fortunate to count him among my mentors. That article can be found here: [Link] John was both an investor and a landlord for Mercury Interactive. As CFO, I had the pleasure to meet with him regularly. He was not only a great businessman, but always took the time to allow me to ask a few questions of him during each meeting – in invaluable opportunity.

I’m surprised that the Fortune article failed to include the story of how John got started buying real estate – a story that John told me a few times. When he and Dick Peery first started, they could only scrape together enough cash to purchase one piece of land, so John looked at all of Silicon Valley and determined that National Semiconductor would need to expand soon, and which direction made the most sense for that expansion. He bought that land and then waited for NatSemi to come ask to buy it. Instead of selling it for cash, he told NatSemi what property he wanted them to buy, for which he would then swap the land they needed in a tax-free deal. The property that he had NatSemi buy and swap with him was double the size of the original and where he thought NatSemi would need to expand next, and sure enough they cam asking to buy that second property. He did four of those tax-free swaps with NatSemi in rapid succession and had enough property to begin the general development business that the Fortune article describes. I love how he built the business by being smart. NatSemi knew exactly what he was doing, and was happy to do each deal with him because he had figured out a deal that was good for them (they got the land they needed immediately for their immediate expansion and also made their future expansion faster by putting necessary land into the hands of a company that NatSemi knew and trusted. They were very comfortable with John making a good profit on the deals because they were good deals for NatSemi.

John told me that story to illustrate several points. First, the value of working hard and doing your homework. He was able to structure those deals because he spent the time to figure out National Semiconductor’s business and know what property was the most likely place for them to expand. Second, doing business is rarely a one-time event. Especially in Silicon Valley, the community doing business with one another is pretty small, and parties often find themselves doing many deals with one another through the years. Structuring a deal in a way that is profitable for both parties leads to future business and more long-term success. In other words, you don’t really negotiate against another party, a negotiation is working with another party to find a “win-win” solution. Third, true success in business does not come from one “win” but rather from having a long-range plan and working to accomplish that plan over a series of years.

So today was my quarterly lunch with some former students. They are direct beneficiaries of one of the things that John taught me – that a very effective way to teach is by telling stories. I tell stories regularly in my classes to illustrate whatever points I am trying to teach.

Much of my success I attribute to my mentors. In my mind, the best way to thank those that mentored me is by providing that same service to the next generation. And so I had lunch today with my former students to thank my mentors.